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Taking Advantage of the Pain - Citadel Expands Into I-Banking

For those of you who haven't heard, Citadel is expanding into the investment banking arena by hiring some ex-Merrill guys. I've said this before - when times get tough and there is pain it is a great time to take advantage. The financial turmoil and destruction of almost every investment banking unit on Wall Street has created a huge opportunity for those looking to expand. Almost every boutique bank I know of has been hiring non-stop all of the bulge bracket refugees, looking to become the next big player.

Expansion and diversification into financial infrastructure plays is not new to Ken Griffin and Citadel. A lot of people don't know but Citadel makes a ton of money in its market-making business. It essentially has so much market flow that it IS part of the financial exchanges as we know it. Additionally, it has a turn-key hedge fund infrastructure program that caters to the hedge fund industry.

So not only it is a hedge fund, it is knee deep into the infrastructure of the US financial markets. Expansion into I-banking is a natural step and a very smart one. A lot of big players such as Blackstone do advisory work that practically equates to banking but most have not officially crossed the line. It will be interesting to see how it all plays out and whether someday Citadel's hedge fund will only be a tiny part of its overall business.